Wide development potential for business in the arctic area

The Arctic should be examined as innovative areas which provide big development potential instead of the production of raw materials. The potential that lies within the development of business in the High North is broader than today’s picture of the area. Ageing and decrease of the population cause challenges.

The Business Index North (BIN) report analyses socio-economic development in eight northern regions in Norway, Sweden and Finland as well as two regions (Murmansk and Arkhangelsk) in northern Russia.

“The economy of the High North is better than one may expect. The High North is far more than its raw materials. The potential that lies within the development of business in the High North, is more than we knew, and broader than today’s picture of the High North”, says Dean and BIN project leader Erlend Bullvåg at Nord University Business School.

“We see the growth of several strong brand names and several strong companies and internationally marked oriented companies in the Arctic. What the north needs is to make it more attractive to live here for the people who will ensure the future success in this area”, says Bullvåg.

Education, work, living conditions, quality of life and infrastructure, including transportation and digitalization – these are the keys to stabilize and preferably increase population figures in the North.

The report shows that the population figures are the main reason for concern in the Arctic. The population in the BIN area including Russian regions has decreased by 3.7 percent in the decade from 2007 to 2016.

The report further shows that the population is ageing strongly. Furthermore, negative net migration and low levels of immigration from abroad affect population numbers in the Finnish BIN regions. People live in city clusters and rural areas lose their population. In 2016, 51% of all Northern Ostrobothnia’s population lived in the city of Oulu.

The report shows some improvement when it comes to employment rates in the BIN area in 2015-2016, however, it is nevertheless characterized by a loss of jobs in mining, farming, forestry and fisheries, and by increased employment in health and social services, real estate, research and development, tourism and construction. Northern Finland saw an increase in employment growth above country average during 2015–2016.

The BIN-report maps several innovative clusters, brand names and companies developed in the Arctic. There is great innovative potential, where these companies are growing even without the access of large investments.

Investors and politicians must look at the BIN-area as innovative regions consisting of great opportunities for development, and not only a land of raw materials. In Finland, examples of such innovative clusters include Kajaani cluster of data centers and Oulu health technology cluster.

When it comes to transport, BIN stresses that the opportunities that arise through the increased use of the Northern Sea Route (north of Russia, leading between Europe and Asia) must be watched closely and stimulated.

The whole infrastructure of the region should be seen as a whole in this context, including Finland’s work on the Arctic Railway from Rovaniemi to Kirkenes, as well as the digital infrastructure in the region.

The needs and opportunities for businesses and work life when it comes to health, tourism and construction should be analyzed further. Furthermore, stimulation of innovation potentials in the region should be continued, as should the required national support for companies in the North – in particular in the financing sector.

About BIN

Business Index North (BIN) is a project that contributes to sustainable development and value creation in the Arctic. The overall goal is to set up a recurring, knowledge-based, systematic information tool for stakeholders such as businesses, academics, governments and regional authorities, as well as media, in the Arctic states. Coordinator of the BIN project is the High North Center for Business and Governance at Nord University Business School in Norway.

Partners are High North Center for Business and Governance, Bodø Science Center, Oulu Business School at University of Oulu, Luleå University of Technology and Russian State Hydrometeorological University. The report is funded by Nordland County and Ministry of Foreign Affairs.